Rachel Reeves faced a backlash from unions and her own MPs tonight after she refused to U-turn on axing the winter fuel allowance for millions of pensioners.
The Chancellor sounded defiance in her keynote speech to Labour conference, despite delegates booing the leadership for thwarting a vote on the controversial policy.
Ms Reeves used her address to insist she would not duck decisions, suggesting the road ahead is steeper than we expected.
Unions are mounting a frantic push to reverse the move - which strips 10million pensioners of up to £300 a year. They are furious that the showdown has now seemingly been pushed back to Wednesday, which is after Keir Starmer gives his own speech and leaves for the US.
Unite chief Sharon Graham said ministers were being cruel, while former shadow chancellor John McDonnell said the government was making a terrible mistake.
Ms Reeves struck a notably more optimistic tone about the countrys future, following a welter of criticism about doom-laden pronouncements and fears they will be self-fulfilling.
She said tough decisions in the upcoming Budget would not dim our ambition for Britain and insisted Tory austerity was a destructive choice which would not be repeated.
However, the scale of the challenge the government faces was underlined as nurses announced while the Chancellor was speaking that they had rejected a 5.5 per cent pay rise offer - demanding even more cash after bumper hikes for junior doctors and train drivers.
In other developments at the conference today:
- The Chancellor pledged to begin the rollout of free breakfast clubs in primary schools from April next year;
- Ms Reeves has boasted about her status as the first ever female Chancellor, saying in her speech that the British public had looked at us, looked at me, and decided Labour could be trusted with their money;
- She admitted Labours freebies bonanza looks a bit odd reassured unions there will not be a return to austerity;
- Angela Rayner is facing accusations over a taxpayer-funded vanity photographer who has been taking glossy pictures of her at work;
- Health Secretary Wes Streeting has risked fuelling infighting over No10 chief aide Sue Gray by swiping that people are acting like she shot JFK;
- A poll has found Labours election-winning coalition is eroding from the inside amid the meltdown over winter fuel and freebies.
Chancellor Rachel Reeves was watched in the hall by many of her Cabinet colleagues as she gave her speech today
The Unite union staged a protest outside the conference venue in Liverpool to coincide with the Chancellors appearance - despite the heavy rain
Former shadow chancellor John McDonnell said the government was making a terrible mistake
Ms Reeves was embraced by Sir Keir after giving her speech this afternoon
The PM and Chancellor put on a show of unity in the conference hall this afternoon
Ms Reeves was giving her keynote speech to delegates as the protest erupted this afternoon
Labour conference descended into chaos today as Rachel Reeves big speech was disrupted by a Gaza protest
When the demonstrator was removed Ms Reeves swiped that Labour is not a party of protest any more before continuing
The Chancellor was addressing delegates in Liverpool when a member of the audience started shouting that the UK is still supplying arms to Israel - forcing her to stop
The protester was wrestled out of the conference hall during the speech
The disruption happened as Ms Reeves was getting into her crunch address to activists
Sir Keir and Ms Reeves in the conference hall after her speech today
The Chancellor also embraced her sister Ellie - another member of the Cabinet
Angela Rayner and Sir Keir watching Ms Reeves give her speech to activists today
As the session opened earlier this morning, Lynne Morris, who chairs the conference arrangements committee (CAC), was heckled over the winter fuel debate timing
The timing of a winter fuel vote has now been pushed back after intense wrangling on the partys organising committee - with claims the schedule is too busy for a debate this afternoon.
Instead the clash - which the leadership is resigned to losing - is likely to take place after the PM has given his keynote speech. And Sir Keir will not even be present as he is due to be travelling to the UN general assembly.
Despite the open revolt, Ms Reeves has made clear there will be no U-turn on the plan, and the vote will not be binding on the government.
Ms Reeves told the hall: Because I know how much damage has been done in those 14 years, let me say one thing straight up: there will be no return to austerity. Conservative austerity was a destructive choice for our public services, and for investment and growth too.
Yes, we must deal with the Tory legacy and that means tough decisions, but I wont let that dim our ambition for Britain.
So, it will be a budget with real ambition, a budget to fix the foundations, a budget to deliver the change that we promised, a budget to rebuild Britain.
Ms Reeves repeated her promise not to turn a blind eye to Covid fraudsters and those who used a national emergency to line their own pockets.
She drew some of her loudest applause as she said: That money belongs in our police, it belongs in our health service and belongs in our schools. Conference, we want that money back.
The winter fuel spat has been intensified by the backlash over Sir Keir, Ms Reeves, Angela Rayner and other senior figures accepting freebies including clothes, tickets and holidays.
But Ms Reeves again insisted there will be no backing down on the cut.
I made the choice to means test the winter fuel payment, so that it is only targeted at those most in need.
I know that not everyone – in this hall, or in the country – will agree with every decision I make.
But I will not duck those decisions. Not for political expediency. Not for personal advantage.
Faced with that £22billion black hole that the Conservatives left this year and with the triple lock ensuring that the state pension will rise by an estimated £1,700 over the course of this Parliament, I judged it the right decision in the circumstances we inherited.
The Royal College of Nursing announced that they had rejected the governments pay offer shortly after Ms Reeves said how proud she was of giving public sector workers a meaningful rise.
I am proud to stand here as the first chancellor in 14 years to have delivered a meaningful, real pay rise to millions of public sector workers we make, she said.
We made that choice not just because public sector workers needed a pay rise, but because it was the right choice for parents, patients and for the British public, the right choice for recruitment and retention, and it was the right choice for our country.
The two protesters from the group Climate Resistance were led from the conference centre in handcuffs and placed in a police van before being driven away.
They had unfurled a banner saying: Still backing polluters, still arming Israel – we voted for change.
As the session opened this morning, Lynne Morris, who chairs the conference arrangements committee (CAC), was heckled as she said: This is a really busy conference and we are trying to accommodate as much as we can, and Im going to take this back straight to CAC and Ill come back to you with an answer ASAP.
Activists were then admonished from the stage for booing.
Unites Andy Green said: This is simply an attempt to take out the debate on the winter fuel allowance.
Today is economy day at conference and we have the Chancellor speaking and a composite motion on the growth mission, which is scheduled for this morning.
So, it is more of a surprise, in fact an outrage, to us that the composite motion from Unite and the CWU on economy for the future is not listed on the agenda for today.
It is disrespectful to our members and every single delegate here and conference itself, who voted for the priorities ballot.
CWUs senior deputy general secretary Tony Kearns questioned why the motion was not scheduled and why it has been briefed that its unlikely to be scheduled for debate this week.
Labour sources have said the leadership is likely to lose the vote on winter fuel allowance but insisted that Ms Reeves would not back down.
Well note it and move on, the source said. Its time for people to start understanding these tough choices are real.
In her speech, the Chancellor tried to strike a more upbeat note, saying her optimism for Britain burns as bright as it ever has done.
But she warned the country faces ruin unless the new government first moves to shore up the public finances.
I can see the prize on offer, if we make the right choices now, she said. And stability is the crucial foundation on which all our ambitions will be built.
The essential precondition for business to invest with confidence and families to plan for the future. The mini-budget showed us that any plan for growth without stability only leads to ruin.
In a sop to critics on the Left, the Chancellor said: There will be no return to austerity.
Conservative austerity was a destructive choice for our public services – and for investment and growth too.
And hinting that spending will rise in the future, she insisted: Stability, paired with reform, will forge the conditions for business to invest and consumers to spend with confidence. Growth is the challenge. And investment is the solution.
Ms Reeves has again insisted there will be no U-turn on the winter fuel cut, pointing to a claimed £22billion black hole in the government finances
Keir Starmer and Rachel Reeves on the stage at the Labour conference today
Former Man United star Gary Neville (left) and Culture Secretary Lisa Nandy at conference today
Transport Secretary Louise Haigh at the conference in Liverpool - which has been blighted by the stormy weather wracking Britain
Merchandise on offer at stands at the annual gathering in Liverpool
In a round of interviews this morning, Ms Reeves said she had not expected or wanted to make changes to winter fuel payments.
She told the BBCs Today programme on Radio 4 this morning that I was not planning to make these changes to winter fuel payment.
These were not changes that I expected to make or wanted to make, but when faced with a situation when theres a £22 billion black hole – not some year in the future – but this year in the public finances, it requires difficult decisions.
The Chancellor defended taking £7,500 worth of clothes from a donor during the election campaign. She also confirmed that she accepted free holiday accommodation in Cornwall valued at £1,400 for her family.
But she stressed that she will not be receiving free clothes in future.
The Chancellor also played down fears of deep spending cuts to fill her claimed £22billion black hole in the government finances, saying there would be no return to austerity.
Puddles of water in a drenched Liverpool as the Labour conference continues
Shadow Treasury minister Gareth Davies said the Tories would not have scrapped winter fuel payments for all pensioners.
Its a political choice for Labour to reduce eligibility for the payment, he told GB News.
They have chosen on the one hand to hand massive pay rises to the unions, while at the same time taking away support for pensioners ahead of winter. That is a political choice.
Asked how the Conservatives would have plugged the black hole in the public finances, he said the opposition was questioning the validity of the claimed £22 billion gap and that the Tories had had a plan to make savings on welfare, to crack down on tax avoidance that Labour was not taking forward.
What this is really all about is what they always wanted to do, and thats roll the pitch for tax rises, which will come in the Budget. Theyre now starting to admit that. That will harm growth and I thought this Government was all about growth.